A quick and easy explanation of how and why you should protect your long-term savings with real money, Gold!

Our interactive calculators use historical figures to compare how your different savings or investments would have performed against Gold over various time scales to show your inflation-adjusted purchasing power today.

We do not offer investment advice, we do not sell anything.

This site and our calculators are free to use, and for educational purposes only.

Gold hits a new all-time high of £1,636.39 per ounce, in March 2023

Current Gold Price £ 1555.43

Most people are unaware of the benefits of holding Gold, but are obsessed with the value of their property.

Our calculator shows how Gold has performed in a way that is easy to compare, and relate to property.

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Why should you own some Gold?

Gold is money. (A simplified history)

Gold is and has always been money; the early currencies were basically just a certificate that was provided as proof of ownership of an amount of gold held in a vault in a bank. As people gained trust in these gold-backed certificates, they began to simply exchange them and accept them for payment, knowing they had the physical gold backing of the face value, which they could take possession of at any time.

The certificates (or notes) were backed by gold, so they were seen as being as good as gold. Over time, the bankers abused this situation as they became aware that people were confident enough just to use the notes and rarely exchanged them for actual physical gold, so they started printing out notes that weren’t actually backed by any gold and started lending out these unbacked notes for a small fee or interest, and that is basically how today’s fractional reserve banking system was born (only a fraction of the currency or notes were backed by gold held in reserve). Today, there is no Gold backing the currency, so there is no fraction of Gold held; the banks simply hold a fraction of the fiat currency in reserve, which is backed by various debt instruments such as taxpayer-backed bonds.
We shouldn’t think of it as buying, or investing in gold, rather converting our fiat currency back in to real money

In the early 1970s, the gold backing was completely removed, and all the notes in circulation became pure fiat (currency not backed by any gold). This allowed the central banks to print as much currency as they wanted, and all the new currency obviously devalued all the existing currency.

The printing of currency is inflation (inflating the monetary supply). The effect of this inflation is seen in the increased prices of everything because it takes more of the devalued currency (fake money) to purchase the same item. The more they print, the higher the prices go because all the currency in circulation becomes watered down or devalued. All countries inflate their currencies, but at different rates; therefore, we see currencies continually exchanging for different amounts. You’ll be most aware of this when you go on holiday and compare the exchange rates.

Gold is money and always has been due to the fact that there is only a finite amount on this planet, it can’t be faked, and most of the easy-to-mine gold has already been recovered. It takes labour and time to extract it from the ground and then it needs to be processed. That is why it holds its value against fiat currencies, which all devalue together against each other, because they are simply printed ink on paper or, more recently, a keystroke on a digital ledger, which takes zero effort to create any amount in seconds.

There are several reasons why gold is considered a better option than fiat currency for saving over the long term:

Inflation hedge: Gold has historically been a good hedge against inflation, as its value tends to increase when the purchasing power of fiat currency declines. Unlike fiat currency, which can be printed or created at will, the supply of gold is limited, which helps to maintain its value over time.

Global acceptance: Gold is a universal currency that is recognised and accepted worldwide, which makes it a highly liquid asset that can be easily bought and sold in most parts of the world. This global acceptance makes gold a reliable store of value that can be easily converted into cash when needed.

Diversification: Investing in gold provides diversification to a portfolio, reducing the overall risk of the portfolio. As a non-correlated asset, gold can act as a buffer against the volatility of other investments in a portfolio, such as stocks or bonds.

Long-term stability: Gold has proven to be a stable store of value over the long term, with its value increasing steadily over decades and even centuries. This makes it an ideal option for long-term savings, such as retirement planning.

Protection against geopolitical risks: Gold can serve as a safe haven during times of geopolitical uncertainty or economic instability. During times of political upheaval or economic crisis, fiat currency may lose value rapidly, while gold tends to hold its value. This makes gold a valuable asset for individuals and institutions looking to protect their wealth during uncertain times.

Limited supply: Gold is a finite resource, and its supply is limited. This scarcity helps to maintain its value over time, even as fiat currency may lose value due to inflation or other factors. This limited supply also makes gold less vulnerable to fluctuations in supply and demand, which can affect other assets such as stocks or real estate.

Tangible asset: Gold is a tangible asset that can be held and physically owned. This makes it a valuable addition to a portfolio, as it can provide a sense of security and stability that other investments may not offer. Unlike fiat currency, which is essentially a digital representation of value, gold is a physical asset that can be touched, felt, and stored.

Low correlation with other assets: Gold has a low correlation with other financial assets such as stocks, bonds, and real estate. This means that gold tends to perform well when other assets are underperforming and can help balance out the overall performance of a portfolio. This low correlation also means that gold can provide diversification benefits beyond just holding a mix of different financial assets.

Historical track record: Gold has a long history of being used as a store of value and a medium of exchange. Throughout history, gold has been a reliable store of wealth, even during times of economic and political turmoil. This long historical track record gives investors confidence in gold’s ability to maintain its value over time.

Central bank reserves: Many central banks around the world hold gold as a reserve asset. This is a testament to gold’s enduring value as a store of wealth. As central banks continue to hold gold, it reinforces the perception that gold is a safe and reliable investment.

Portfolio insurance: Gold is often considered a form of insurance for a portfolio. It can help protect against unforeseen events that could impact the value of other assets in the portfolio. By holding gold, investors can mitigate the risk of a significant loss in the value of their portfolio.

Alternative to cash: Gold can also serve as an alternative to cash, particularly during times of low interest rates. When interest rates are low, cash holdings may lose value due to inflation. In contrast, gold can provide a return on investment over the long term, making it a better option for preserving the value of cash holdings.

Physical demand: Gold has a physical demand beyond just its use as an investment. It is used in jewellery, technology, and other industrial applications. This physical demand provides fundamental support for gold prices, making it less vulnerable to purely speculative trading.

Potential for capital gains: While gold is primarily used as a store of wealth, it can also provide opportunities for capital gains. The price of gold can be influenced by a range of factors, including supply and demand, inflation, and geopolitical risks. By carefully timing their purchases and sales of gold, investors can potentially generate capital gains in addition to the other benefits of holding gold.

Overall, the combination of gold’s inflation-hedging properties, global acceptance, diversification benefits, long-term stability, protection against geopolitical risks, limited supply, and tangibility make it a better option than fiat currency for saving over the long term. While there may be short-term fluctuations in the price of gold, its value has proven to be resilient over time, making it a reliable store of value for investors looking to preserve their wealth.

The game is rigged
Next time you play Monopoly, let the banker create as much fake money as they want, and see how that game plays out.
You’ve probably read or heard about the advantages of compound interest and how it can boost your savings over time, but have you ever considered how compound inflation and compound charges destroy your savings over time?

Have you ever thought about Gold? Probably not, other than as jewellery, but gold has been a hedge against inflation for thousands of years and has seen many fiat currencies destroyed and disappear over that period, while all the time this real money has held its value and protected the wealth and savings of anyone that has held it.

The amount of new currency printed by the USA, UK, and EU in the last 20 years is staggering. Here are some estimates:

USA: According to the Federal Reserve Bank of St. Louis, the total amount of currency in circulation in the United States has grown from around $700 billion in 2000 to over $2.1 trillion in 2020. This represents an increase of around 200% over the last 20 years.

UK: The Bank of England has increased the supply of money in the UK dramatically over the last 20 years. In 2000, the broad money supply (M4) was around £1.2 trillion. By 2020, it had increased to over £2.9 trillion, an increase of around 140%.

EU: The European Central Bank (ECB) has also significantly increased the money supply over the last 20 years. According to ECB data, the M3 money supply in the Eurozone was around €5.6 trillion in 2000. By 2020, it had increased to over €13.7 trillion, an increase of around 145%.

If gold isn’t worth owning, why do countries and governments have so much?

According to the World Gold Council’s data as of December 2021, the top 10 countries with the largest gold reserves are:

United States: 8,133.5 tonnes
Germany: 3,367.4 tonnes
Italy: 2,451.8 tonnes
France: 2,436.1 tonnes
Russia: 2,299.9 tonnes
China: 1,948.3 tonnes
Switzerland: 1,040 tonnes
Japan: 836.2 tonnes
India: 722.5 tonnes
Netherlands: 674.5 tonnes

Maybe we should say which central banks own the most gold; many central banks are private institutions, and it is the banks that own the gold and silver, not the government.

Top 5 Banks with Largest Gold Reserves:

  1. Federal Reserve System (USA): 8,133.5 tonnes
  2. Deutsche Bundesbank (Germany): 3,367.4 tonnes
  3. Banca d’Italia (Italy): 2,451.8 tonnes
  4. Banque de France (France): 2,436.1 tonnes
  5. Central Bank of the Russian Federation (Russia): 2,299.9 tonnes

Top 5 Banks with Largest Silver Reserves:

  1. People’s Bank of China (China): 11,000 tonnes
  2. Banco de México (Mexico): 6,257.8 tonnes
  3. US Department of the Treasury (USA): 5,000 metric tonnes
  4. Banque de France (France): 3,841.5 tonnes
  5. Deutsche Bundesbank (Germany): 3,369.7 tonnes

It’s important to note that these figures are subject to change as countries may buy or sell gold reserves based on economic and political considerations. Additionally, some banks may hold significant amounts of gold and silver on behalf of other countries or organisations.

Additionally, it’s worth noting that some countries, such as China and Russia, have been actively increasing their gold reserves in recent years as a hedge against currency fluctuations and geopolitical tensions. According to ‘official figures’, The United States has the largest gold reserves in the world, and its gold holdings make up the largest portion of its foreign exchange reserves.

Gold reserves are important for central banks and governments as they provide a measure of financial security and stability and can be used to support the value of a country’s currency. However, gold is also a finite resource, and its value can fluctuate based on market conditions and global events.

While some countries have large gold reserves, others have significant gold mining operations, which can be an important source of economic growth and employment. Some of the largest gold-mining countries in the world include China, Australia, Russia, the United States, and Canada.

It’s also worth remembering that banks can’t always be trusted, and are proven to commit criminal acts for their own benefit. (see here) 

Fiat Currency 

Fiat means something that is done by force of authority.

A fiat currency is a means of payment that is intrinsically worthless as it is no longer backed by anything of value, such as precious metals. It is a forced method of payment under the control of the government under the legal tender laws. Its purchasing power is determined by the government and central banks rather than free market economics.

Queen looking at our gold

Do you realise you are working hard for the financial institutions?

Today’s financial products are designed to be extremely complicated; most so-called financial experts don’t know how they really work, so how is the average person expected to know? This is, of course, part of the design to keep people in the dark and enable financial institutions to make huge profits. While the general public is bombarded with advertising telling them how important it is for them to keep depositing their hard-earned ‘money’ into these saving and investment vehicles because “they are there to help”, how many people really know what this service is costing them over possibly 30 years or more?

Once people become more aware that the sole intention of these financial institutions is to transfer as much of your wealth to them through commissions, referrals, fees, charges, penalties, interest payments, market manipulation, and numerous other ways, we soon realise they are not there to help us. But to help themselves at our expense.

Putting aside all the charges, etc. that reduce your savings and retirement pension over time, how many people really take into account or consider the continual, unavoidable, and worst destruction of their wealth on a daily basis? Inflation!

Inflation is designed to be indiscriminate; it doesn’t care if you’ve already paid income tax on your earnings, capital gains tax, or any other tax; inflation will keep taxing you every day, month, and year on all fiat currency investments or savings you have, including the ‘tax-free shelters, and will continue to destroy the purchasing power of those savings for as long as you hold them, and the longer you hold them, the more you will lose.

The debate between gold and fiat currency has been ongoing for centuries, with both sides presenting compelling arguments. Fiat currency, which is backed by a government or central bank, has been the dominant form of currency for the past century. However, gold has been considered a valuable asset for thousands of years, with its value remaining relatively stable over time. In this essay, we will explore why gold is better than fiat currency and why it remains a popular choice for investors, especially during times of economic uncertainty.

The Historical Importance of Gold

Gold has been used as currency for thousands of years, with the first recorded use dating back to ancient Egypt in 2600 BC. Throughout history, gold has been a symbol of wealth and power, and it has been used to facilitate trade between countries. The importance of gold has also been recognized by governments, with many countries using gold to back their currencies.

During the 19th century, the gold standard was adopted by many countries, including the United States. Under the gold standard, paper currency was directly convertible into gold at a fixed price, and the value of a currency was determined by the amount of gold that backed it. The gold standard provided a stable monetary system, as the value of the currency was tied to the value of gold.

However, the gold standard was abandoned by most countries during the 20th century, and fiat currency became the dominant form of currency. Fiat currency is not backed by gold or any other physical asset but rather by the government or central bank that issues it.

The Flaws of Fiat Currency

Fiat currency has several flaws that make it a less desirable form of currency than gold. One of the main flaws of fiat currency is that it is subject to inflation. Inflation occurs when the supply of money in an economy exceeds the demand for goods and services, leading to an increase in prices. This can be caused by a variety of factors, such as an increase in the money supply or a decrease in the demand for goods and services.

Inflation erodes the purchasing power of fiat currency over time as the same amount of money can buy fewer goods and services. This is particularly problematic for those on fixed incomes, such as retirees, who are unable to increase their income to keep up with inflation.

Another flaw of fiat currency is that it is subject to government and central bank manipulation. Governments and central banks can print more money to finance their spending or stimulate economic growth. While this may provide short-term benefits, it can lead to inflation and a decrease in the value of the currency.

In addition, governments and central banks can manipulate interest rates to control inflation and stimulate economic growth. However, this can lead to distortions in the economy and create asset bubbles, which can have negative consequences for investors and the economy as a whole.

The Advantages of Gold

Gold, on the other hand, has several advantages over fiat currency. One of the main advantages of gold is that it is a finite resource. While there is a limited amount of gold in the world, fiat currency can be printed indefinitely. This means that gold is less susceptible to inflation than fiat currency, as the supply of gold cannot be easily increased.

In addition, gold is a globally recognised store of value. It has been used as a medium of exchange for thousands of years, and its value has remained relatively stable over time. Gold is also widely traded and accepted around the world, making it a liquid asset that can be easily bought and sold.

Another advantage of gold is that it is not subject to government or central bank manipulation. The value of gold is determined by market forces, such as supply and demand, rather than by the actions of governments or central banks. This makes gold a more reliable store of value than fiat currency, which is subject to the whims of politicians.

Comparing the purchasing power of the UK pound to gold over the last 50 years can provide insights into the relative value of each asset over time. Here, we will use the Consumer Price Index (CPI) as a proxy for the purchasing power of the UK pound and compare it to the price of gold over the past five decades.

In 1971, the UK abandoned the gold standard, which fixed the value of the pound to a set amount of gold. Since then, the value of the pound has fluctuated against the price of gold, which has been determined by supply and demand factors in the global market.

In 1971, the average price of gold was around £12.60 per ounce. Adjusted for inflation using the CPI, this is equivalent to approximately £165 in today’s money. By 1980, the price of gold had risen significantly to reach an all-time high of around £442 per ounce (or £1,369 adjusted for inflation). This increase in the price of gold was driven in part by high inflation rates in the UK and other countries during the 1970s and early 1980s.

In the 1990s, the price of gold fell back to more moderate levels, averaging around £200 per ounce (or £357 adjusted for inflation) over the decade. This period was characterised by lower inflation rates and a relatively stable economic environment in the UK and other countries.

In the early 2000s, the price of gold began to rise again, driven by a number of factors, including global economic uncertainty, rising demand from emerging markets such as China and India, and a weakening US dollar. By 2011, the price of gold had reached an all-time high of around £1,185 per ounce (or £1,337 adjusted for inflation). Since then, the price of gold has fluctuated but has generally remained at higher levels than in previous decades.

Overall, the price of gold has experienced significant fluctuations over the past 50 years, with periods of both high and low prices relative to the UK pound. Adjusted for inflation, the average price of gold over this period has been around £455 per ounce, which is more than three times its average price of £134 per ounce in nominal terms.

In comparison, the CPI-adjusted value of the UK pound has fluctuated over the past 50 years but has generally decreased in value over time. In 1971, the CPI stood at around 41, meaning that £1 at that time would be equivalent to around £14.50 in today’s money. By 2021, the CPI had risen to 122, meaning that £1 in 1971 would be worth around 7p today. This represents a significant decrease in the purchasing power of the UK pound over the past 50 years.

Have you ever wondered why most financial advisers, banks, or pension funds never recommend their customers buy and hold physical gold for long-term financial protection?

Maybe it’s because they wouldn’t have a lifetime of charges and fees to collect from you if they did.

Over thousands of years, untold fiat currencies have been debased due to the greed of those in power, returning them to their intrinsic value of zero and causing the downfall of many civilizations. While Gold has remained a store of wealth and real money throughout time, for those wise enough to hold it.
KingTut, gold has held its value for thousands of years.
In January 1990 you would only have needed £6.50 to buy 1 gram of gold, but in January 2020 to buy the exact same gram of gold, you would have needed £38.50 because of how much the currency had been devalued during this time due to so much more of it being created out of thin air.

In 1990 the average salary was £13,677.00 which means one months salary, £1139.75 would have bought you approx. 175 grams of gold. In 2020 the average salary is £31,350.00 or £2,612.50 a month, yet the value of gold purchased for a months salary in 1990 would be valued today at approx. £8,044.00 (£46 per gram 31/10/2020).

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